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As an SAP consultant, one of the most important tasks for us is to ensure all transactions made in ERP system will contribute to accurate calculation for financial management. The UK is leaving the EU in few hours today, and fortunately there’s still transition period for further negotiation in terms of trading. However it’s inevitable for quite a bunch of changes needed to be made in SAP systems before transition period ends. In this article I will briefly suggest some points based on my implementation experience and reference took from SAP help portal. To manage potential risks, SAP has also made a great effort to provide notes on help portal since 2016. https://blogs.sap.com/2019/05/23/sap-notes-on-brexit/
Master Data
-Tax-related : For those companies based in UK, they may no longer have tax reduction or even tax free privilege after Brexit. So if their delivery customers are EU members, the tax has to be increased, thus may have to change tax classification for business partner master, and review condition record to make sure correct tax determination. And same changes for those companies in EU but doing business with the UK. Furthermore, if UK uses its new identity to make special deal with other countries such us the US, those business partners located in the US has to be changed on master data too.
-Reconciliation account : Depends on how client differentiate their account, if previously they design such as domestic / EU / other countries, then those master data under country code GB needed to be change, since after Brexit they should be taken out of EU category. Also have to consider transferring account balance customers / vendors.
Configuration
- Organisational structure may be changed if UK-based companies establish new companies / plants / sales offices in EU region ; or those companies not based in UK do so in the UK for tax planning consideration.
- Other configuration including but not limited to tax code adjustment, EU indicator remove for country code GB, pricing procedure especially for tax related…
Transaction
Existed transaction has to be reviewed carefully after tax related master data and pricing related configuration change made.
-Sales rebate : since the final settlement may be far from the time when condition contract created, it’d better if use partial settlement before master data change, so that system can automated determine different taxes when in pre-Brexit and post-Brexit.
-Long-term contract : this has to be split to avoid wrong tax determination for pre and post-Brexit period.
Special Reporting — EU
-EC Sales List (ESL) : a report EU used for monitoring B2B sales include goods and service, the report should include EU customer’s country code, EU customer’s VAT registration number, net value of delivery goods or service. Customer which located in UK will have no valid VAT number after Brexit, so the entry for related field may need to clear in customer master to prevent unnecessary printing content for ESL or VAT report. However as SAP suggested, this number may still be useful for UK domestic purpose, this change is not urgent for now.
-Intrastat Report : a system similar to custom declaration system EU used to collect trading information and generate statistics from EU countries. (UK will continue to use this after Brexit)
Other business impact
-Due to additional custom duties for UK after Brexit, there will be expected longer lead time than before, how to manage supply chain is important.
-Intercompany process may changed. For example products made in China plants, and shipped to Netherlands plants for further manufacturing, and then sold to UK end consumers. Before Brexit, the sales between Netherlands and UK was being treated as domestic sales. While after Brexit is like paying tax for two times. If not for those products UK charged extremely high tax from China, companies may consider the possibilities to change current intercompany process.
Recommended reference:
https://www.linkedin.com/pulse/brexit-potential-impacts-sap-systems-clare-campbell-smith/
